News for Healthier Living

Hospital Charges Show Huge Variance in Study

For appendicitis, charges ranged from $1,500 to $180,000

TUESDAY, April 24 (HealthDay News) -- Acute appendicitis is a common medical condition, but the cost of treating it varies enormously -- from about $1,500 to $180,000 -- researchers report.

The median charge in 2009 was nearly $34,000, according to a California study that looked at more than 19,000 patients treated for uncomplicated appendicitis. The disparity is typical of price variations across the United States, the researchers added.

"Given estimates that 60 percent of bankruptcies in the United States involve catastrophic medical expenses, these data should alarm those making decisions about our society's ability to obtain medical care without financial catastrophe," the researchers wrote in a letter published online April 23 in the Archives of Internal Medicine.

For their study, they looked at patients aged 18 to 59 who were hospitalized three days or less. Most had an appendectomy (surgical removal of the infected appendix).

Individual patient considerations reflected some of the cost differences, as did length of stay, severity of illness and hospital type. The researchers said patient level and hospital factors accounted for about two-thirds of the price disparities, but about one-third -- 32 percent -- remain unexplained.

County hospitals tended to charge the least, while for-profit hospitals charged the most, the study found.

A spokeswoman for the American Hospital Association said each patient's course of care is different. And, "the costs also reflect more than the cost of serving an individual patient," said Marie Watteau, the association's director of media relations. "They reflect the costs of maintaining essential health care services for their community 24 hours a day, seven days a week."

Different types of hospitals incur different expenses, she explained. "One hospital might have a large role in training health care professionals or conducting research," Watteau said. "Another may maintain the community's only trauma or burn unit. And still another may provide a higher portion of its care to patients unable to pay for their care."

In the new study, the figures only reflect what patients were billed, not what the hospitals were actually paid. Many hospitals negotiate with insurance companies to lower fees, while uninsured patients often receive the total bill.

The highest reported charge -- $182,955 -- was for a woman who also had cancer, but the bill didn't reflect any cancer treatment, according to published reports.

These findings point out serious flaws in the health care system, the researchers and other health-care experts said. Well-insured patients are protected from charges, while
underinsured and uninsured patients get exorbitant bills "without understanding what the charges mean," the researchers wrote. The concept of market theory within the health care system doesn't work, it appears, and more work is needed to help the patient become a true "consumer."

Edward Howard, executive vice president of the Alliance for Health Reform, said
efforts to promote transparency can help. "At the same time, we need to test out new ways to pay hospitals and doctors that give them incentives to provide better quality care at lower prices, as judged by the outcomes their services yield," Howard said.

That hasn't happened yet, because the third-party payers (employers and insurers, mainly) fear that their employees or insured groups will balk if familiar providers are excluded from networks, he said.

Expecting patients themselves to compare prices is unrealistic, Howard added. He found that out in 2003 when he was rushed to the hospital because of sudden cardiac arrest. "Even had I been conscious, I would not have been likely to ask the EMTs if they could take me to the hospital where charges were lowest -- assuming I had called around after the attack [or looked at the Internet] to find that out," he said.

Dr. Anthony Shih, executive vice president for programs at The Commonwealth Fund, called the findings important. "There is also a growing body of evidence that not only do charges vary significantly but the actual prices paid for a given service varies significantly among insurance plans within a state [even sometimes for a given provider]," he said. Within one state, prices paid for the same service can be three to six times different, he added.

"This price variation is not only irrational, but is also inequitable and administratively complex," Shih said.